OFX Faces Revenue Pressure and Rising Bad Debts as Platform Migration Accelerates
OFX Group reports solid progress in migrating corporate clients to its new platform, OFX 2.0, despite a decline in net operating income driven by macroeconomic uncertainty. The fintech’s strategic product launches and client growth signal potential for recovery.
- Corporate new transacting clients grow 25.6% year-on-year
- 39.2% of corporate clients migrated to New Client Platform globally
- Net Operating Income down 8.8% quarter-on-quarter due to lower transaction values
- 80 new products and features launched in 2Q FY26
- On-market share buy-back initiated, deploying $1.9 million
OFX Navigates Challenging Macroeconomic Environment
OFX Group Limited (ASX – OFX) has released its trading update for the second quarter of the 2026 financial year, revealing a mixed performance shaped by ongoing global economic uncertainty. While net operating income (NOI) declined by 8.8% compared to the previous quarter, the company’s strategic transition to its new technology platform, OFX 2.0, continues to gain momentum.
Macroeconomic headwinds have dampened business confidence, leading to a 9.1% drop in average transaction values (ATVs) across the group. However, this was partially offset by a 4.1% increase in transaction volumes, reflecting sustained client activity despite cautious spending.
Strong Client Growth and Platform Migration
The highlight of the quarter was the robust growth in new corporate clients, with new transacting clients (NTCs) rising 25.6% year-on-year and 15.6% quarter-on-quarter. This growth is attributed to the successful rollout of the New Client Platform (NCP), which is now live in all major markets including Australia, Canada, and soon the United States.
Corporate client migration to the NCP has reached 39.2% globally, with Australia leading at approximately 71% migration. Early data from migrated cohorts show increased foreign exchange revenue, suggesting that the platform is enhancing client engagement and transaction activity.
Innovation Drives Client Engagement
OFX launched 80 new products, features, and services during the quarter, including QuickBooks two-way sync, a streamlined registration process, a new Australian website, and an advisor portal for accountants. These innovations are designed to simplify financial operations for corporate clients and improve user experience.
Additionally, the company’s focus on training and development within its commercial teams has led to improved client activation rates and higher marketing opt-in rates, which bode well for future growth prospects.
Financial Challenges and Risk Management
Despite positive operational developments, OFX faced increased bad debts totaling $3.2 million in the first half of FY26, primarily due to isolated incidents in the North American corporate segment. The company is actively pursuing recoveries and enhancing risk controls, leveraging the capabilities of the NCP to implement more sophisticated safeguards.
Operating expenses remain tightly managed at approximately $90.5 million for the first half of the year. Meanwhile, OFX has commenced an on-market share buy-back program, deploying $1.9 million to acquire 2.3 million shares, signaling confidence in the company’s long-term value.
Looking Ahead
OFX is set to release its half-year results on 11 November 2025, which will provide further insight into the financial impact of its platform migration and strategic initiatives. The upcoming migration phases in EMEA and the US will be critical to sustaining growth momentum and improving profitability.
Bottom Line?
OFX’s platform transition shows promise, but macroeconomic pressures and risk challenges will test its path to growth.
Questions in the middle?
- How will the upcoming US and EMEA migrations impact overall client engagement and revenue?
- What measures will OFX implement to mitigate rising bad debts in North America?
- Can the new products and features launched sustain long-term revenue growth amid economic uncertainty?
